The Telegraph
Friday , March 16 , 2012
Since 1st March, 1999
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Why ICU touched a raw nerve

Calcutta, March 15: Dinesh Trivedi yesterday said his budget was aimed at bringing the railways out of “the ICU” but he did not say who put the utility in the intensive care unit.

A Trinamul minister in Bengal was quoted as saying today in the presence of the chief minister that the ICU parallel was a direct attack on “Mamata-di since she had held the portfolio earlier”.

The Bengal minister, who was attacking Trivedi, may have unwittingly brought into focus something the railway minister has left unsaid.

A scrutiny of the railways’ finances — tucked in the annexe of the 40-page budget — reveals that the poor health could largely be traced to the policies pursued by Trivedi’s predecessor in the ministry, Mamata Banerjee.

“There have been hardly any efforts to generate resources in the last three years and the numbers speak for themselves,” said a senior official of the Railway Board from Delhi.

Lack of efforts to generate revenue has seen the operating ratio of the railways shoot up from 75.9 per cent in 2007-08 to 95 per cent in 2010-11. Mamata took charge of the rail ministry in 2009.

The operating ratio shows the efficiency of an organisation’s management by comparing operating expenses to net income. The lower the ratio, the greater the organisation’s ability to generate profit.

In railways, an operating ratio of 80 or lower is desirable. While presenting his budget, Trivedi set a target of reducing the ratio to 84.9 per cent in 2012-13 and 74 per cent by 2017.

“I had factored in an increased earning of Rs 4,000 crore from the hike in rail fare while forecasting a lower OR (operating ratio) for the next year,” the railway minister told The Telegraph.

Trivedi today admitted that he had a tough time presenting the budget because of the poor health of the railways. “The railway funds had gone into negative and I had to take a loan of Rs 3,000 crore from the finance minister to place the budget,” he said.

Data available with the railways revealed Mamata’s failure in meeting the operating targets was one of the main reasons behind the cash crunch that Trivedi faced till finance minister Pranab Mukherjee bailed him out with a loan.

In the 2010-11 budget placed by Mamata, the ratio was as high as 94.6 per cent and her budgetary estimate for 2011-12 was 91 per cent.

The widening gap between income and expenditure, however, forced the railway ministry to revise the ratio to 95 per cent for the previous financial year, the last year of Mamata as railway minister. The budget figures also revealed that she failed to meet her target for plan expenditure, which would have created lasting assets for the railways, and missed the revenue target.

“There has been a steep hike in fuel prices, power tariff, prices of cement and iron which are required for construction of coaches, locomotives, components and tracks. Also, the salary burden has gone up steeply after the implementation of the Sixth Pay Commission’s recommendations,” the Railway Board official pointed out, explaining the steady increase in expenditure.

Since 2004-05, fuel prices have gone up by 52 per cent and power tariff by 22 per cent, he said. Salary to 14 lakh employees and 12 lakh pensioners accounts for 52 per cent of the railway’s working expenditure after the new pay commission recommendations.

But, sources said, during Mamata’s tenure from May 26, 2009 to May 19, 2011, the ministry did very little to shore up its earnings, which could have lowered the operating ratio.

A rail board member said that plans to reduce expenditure and augment income took a beating in Mamata’s tenure as officials hardly got time to meet the minister. She spent more time in Bengal than at Rail Bhavan in Delhi.

The veteran with Indian Railways also pointed out that her dislike for tough decisions — hike in rail fare and cuts in unproductive expenditures — tied their hands.

“During these two years, all officials, including Railway Board chairman, members and junior officials of the Eastern, South Eastern and Metro Railway, were mostly busy in organising the numerous functions held in Bengal,” said a former member of the board. “There were practically no meetings on planning,” he added.

Before the May 2011 Assembly elections in the state, the railways organised nearly 200 programmes to flag off trains, lay foundation stones for factories and other facilities across Bengal. “These populist measures may have pleased many but actually ate into the dwindling funds of the railways,” the official said.

Sources said on average, Rs 50,000 to Rs 70,000 was paid to singers. Several committees headed by representatives from the culture clans also added to the expenditures. “All these added to the financial burden…. But as there were not enough funds, important projects like augmenting safety and improving passenger amenities suffered,” he said.